How energy is priced

At AGL, we’re experts at all things energy. If you want to learn more about how energy is priced or the recent pricing changes, let us break it down for you.

The costs explained

There are many factors that affect the cost of getting electricity and gas to you. Our business activities include buying wholesale energy and providing network services to deliver that energy to you. In addition, we arrange connections, metering and billing.

  • Wholesale market costs

    The wholesale market cost is the amount we pay to buy enough gas and electricity to supply to our customers. Electricity can be bought directly from the wholesale electricity market where generator companies sell their output. Of course, it’s not like a Sunday market with stalls and crafts, it’s all done electronically, and prices fluctuate depending on availability and demand.

    Gas can be bought directly from gas extraction or production plant operators, or through indirect energy trading markets.

  • Network costs

    Network costs are the costs that a distributor incurs to send energy to homes via poles, wires, pipes and meters. AGL will pay distributors for the cost of delivering this energy to you.

  • Government and regulatory costs

    There are also a number of federal and state government schemes that can add costs. This may include renewable energy targets and energy efficiency schemes.

  • Retailer costs

    AGL also has direct and indirect costs in arranging the supply of wholesale energy and network services, complying with regulation and in providing customer service. This cost is calculated into our energy rates.

Recent changes to electricity prices

The industry has just gone through some changes

What does the reference price mean?

The reference price is a benchmark electricity price set by the government that makes it easier to compare prices between energy retailers.

Reference price details

What does DMO mean?

DMO stands for Default Market Offer and is a price cap set by the Australian Energy Regulator on most ‘standing offers’. The caps differ depending on the distribution areas and tariff types.

DMO details 

FAQs

Installing a solar power system can result in a significant reduction of overall bill amounts.

A solar power system harnesses energy from sunlight via solar panels on the roof and converts it into electricity. Generating electricity in this way is considered environmentally friendly as it produces no direct greenhouse gas emissions.

With a net metered solar power system, the electricity that is generated is used by the home or business, and any excess electricity (where the solar power system is generating more than is being used in the home or business at any point in time) is fed back into the electricity grid.

With a gross metered solar power system, all the electricity that is generated is fed back into the electricity grid.

Customers with either a net or gross metered solar power system are paid for the excess electricity that is fed back into the grid in the form of Solar Feed-in credit on their electricity bills.

So a net metered solar power system reduces the amount of electricity that homes and businesses need to buy for use during the day. Plus, the Feed-in Credits for solar electricity not used by the home or business and fed into the grid helps off-set the cost of electricity that is purchased from the grid.

With a gross metered solar power system all the solar electricity generated is fed into the grid, for which the home or business will receive Feed-in Credits, but all the electricity used by the home or business is drawn from the grid and paid for under the customer's energy plan.

Solar Feed-in tariffs, which are used to calculate Solar Feed-in bill credits, differ from State to State and may depend on when a Solar Feed-in agreement was entered into and the type of metering that is set up.

The amount of any solar Feed-in Credits received will depend on geographical location, the size of the solar power system installed and, in the case of net metered systems, the energy usage of the home or business at the time the solar power system is generating electricity.

Installing a solar power system reduces the size of electricity bills, and can significantly do so depending on size of the particular system installed. For more information about solar power systems, please visit AGL Solar or call the AGL Solar team on 1300 274 165.